Cincom Acknowledges There Is A Composite Applications Environ-ment Out There

Event Summary

Cincom Systems, Inc. (, a privately-held, Cincinnati, OH based provider of software solutions and services primarily to complex manufacturers for nearly four decades, continues to strive to provide its customers an evolutionary path through frequent major technological changes, enabling them to keep pace without major disruption of their business. To that end, on March 14, amid worldwide economic woes and strong global competition from peer companies, Cincom Manufacturing Business Solutions claimed to be weathering the storm by providing compelling business value to those seeking to eliminate waste, improve business processes, and integrate disparate business systems

In the first fiscal quarter of 2003, the division reportedly booked over $5 million in new Enterprise Resource Planning (ERP) business. As a privately-held company, Cincom does not disclose detailed financial statements, but according to our estimates, the company's total revenues in fiscal 2002 were ~180 million, which represented over 30% growth year over year. Since 1968, the company has developed tools for manufacturing, financial, and sales automation applications. As a result, its diverse software portfolio manages application development, customer support, database, call center, and manufacturing functions. In addition to core ERP software, Cincom has developed, marketed, and still supports software for document management, knowledge systems for sales, and customer relationship management (CRM). Its software solutions are used by more than 5,000 customers in over 90 countries worldwide.

Much of this recent sales success is reportedly attributed to Cincom's Environ, an enabling technology that is tightly integrated with Microsoft's BizTalk Server technologies, and which should thereby provide the ability to define event and action metadata that is used to generate BizTalk XML specifications that can be incorporated into a BizTalk Orchestration tool for integrating business process. In other words, Environ's publish-and-subscribe model defines events and publishes them via Microsoft's BizTalk, which in turn assigns the necessary transactions and applications needed to cause future events to occur. Environ includes generic, subscribe-side Active Integration Components (AICs) that call Cincom's and other common object model (COM) business objects or web services to perform single and multiple actions incorporated into an event. The AICs use the Environ metadata to determine the appropriate business object to call, parameters associated with the business object, and who inside or outside the organization is responsible for the action's events. On the publishing side, Environ includes generic monitoring services to poll for pending events and convert events into XML documents. The metadata includes the BizTalk Channel to post the event that allows the orchestration process to carry out its defined task.

Environ also provides a web user interface (UI) to set up metadata for the client's existing applications and for all business entities in the client's manufacturing environment the customers, the suppliers, the departments however the customer wants to view his/her business. Next, actions that occur in the organization are defined and used to build events and their relationship to other actions. In turn, events are driven from the pre-defined metadata that encompasses all systems of record. When Environ gets deployed, it should display events as processed, suspended, etc. and should track their status in real time. As events are resolved, it should track the action, no matter what the underlying system of record is, and it creates reminders, call reports, documents, and XML-based information, and contacts those business entities subscribed to the event.

Environ/BizTalk further provides a user interface that allows the user to graphically depict a business process, exposing the necessary steps, procedures, and associated timeline. It provides the ability to represent the complexity of a given process, allowing inefficiencies and non-value-added functions to be discovered. Cincom claims Environ's publish-and-subscribe model translates process steps into transactions, even across disparate systems, and seeks to automate as many processes as possible.

Despite the modern and rich functionality of today's ERP systems, there is still an implied sequence and necessity to manually key-in information when it comes to performing many business processes. Notice the chain of events that, when building upon one another accumulate time, resources, and system requirements, until such time that the process is complete and accounted for. One good example would be a Purchased Part Shortage handling, a critical process for many manufacturers. Production is literally waiting on a specific part, and cannot continue without it, causing schedule delays, or worse, a late shipment. The organization, while anxiously anticipating the part's arrival, may have a defined process in place, but because it is sequential and involves multiple steps, may delay the part's arrival at its desired location on the shop floor to an awaiting order.

Using Business Process Management (BPM) and Business Process Optimization (BPO) solutions like Cincom's Environ, processes like Part Shortages could become greatly compressed, with each area of the business having their information need or requirement being reported to them instantly, without the need for keying/re-keying information, across what are often disparate systems of record. Non-value activities would thus be eliminated, while times would be greatly compressed, with all the necessary information being captured as in traditional methods. What Cincom would like to emphasize is that this framework can be applied to any business process, to better automate the chain of events, helping to increase responsiveness while eliminating non-value added steps. BPM and BPO solutions like Environ act as a middleware, sitting between the technology layer and the business applications layer (which could be made up of several department or enterprise systems). A number of key business benefits could subsequently be realized, depending upon the process selected, to include: reduced cost of sale, reduced obsolete inventory, proactive vs. reactive resources, elimination of non-value added steps, compressed time, increased throughput, improved quality, less maintenance of disparate systems, elimination of keying/re-keying information.

With Environ as its technology foundation, Cincom has also launched a new release of its flagship ERP solution, CONTROL, which employs a web-based and component-based Enterprise Management solution that calls upon a lineup of component-based industry solutions geared toward the specific requirements of complex manufacturers. Overall, CONTROL handles many needed ETO processes from dynamic PLM-product lifecycle management (with strong information exchange and efficiently allocated resources) to configuration management (in which changes are immediately reflected throughout the enterprise and product lifecycle), and demand management for demand-driven manufacturing.

This is Part One of a two-part note.

Part Two will discuss Challenges and make User Recommendations.

Market Impact

Despite possibly being a schoolbook case of longevity in the software business, by judiciously embracing new enabling technologies to improve customers' mission-critical business processes leveraging systems that are already in place, Cincom might prove that an old dog can be taught new tricks'. The vendor continues to serve complex product manufacturers with a suite of applications that covers a broad range of processes, from customer relationship management (CRM), design & engineering, and demand planning to distribution and after-sale support. Also, Cincom developed sharp vertical engineer-to-order (ETO) complex manufacturing functionality long before most of its larger competitors had grasped the concept of vertical focus (see Cincom Sticks To CONTROL Of ETO And MRO).

Additionally, with its Interactive Selling and Product Configuration Solutions (formerly iC Solutions) product for sales force automation (SFA) and bid management functionality that is well-attuned to the CRM needs of both complex manufacturers and of some non-manufacturing industries (e.g., financial institutions), Cincom continues to enhance its long-standing differentiating value proposition with the recent refinement of its CRM offering for complex manufacturing via the following three components: Cincom's Knowledge Builder, Cincom's Interactive Sales Configurator, and Cincom's e-Channel (see Cincom Asserts Expertise In CRM For Complex Manufacturers). As a result, Cincom has been one of the most functional and, at the same time, one of the easiest to install and maintain complex manufacturing aimed products in the market, with a low total cost of ownership (TCO) and a software vs. service cost ratio averaging enviable 1:1. Another factor that may bode well for its future is its international coverage, and a broad geographic revenue mix (a few thousands of customers in over 90 countries), which not many vendors of its stature can advertise.

Still, while this wise bread-and-butter' functional approach remains steady, much of the technology behind Cincom's offerings has recently been updated. While the blessing of being a veteran in the market lies in the functional astuteness, the curse thereof has been that many products have had to be developed using technologies and architectures that were available in the 80s and early 90s (e.g., COBOL or proprietary SUPRA database). Also, the entrepreneurial spirit and enthusiasm of its management and an early mover advantage in terms of vertical focus could not entirely make up for its finite resources. As a result, during mid and late 90s, many high-flying publicly traded ERP competitors outpaced Cincom both in the scope of the extended-ERP functionality, in terms of more modern technological foundation, and mind and market share-wise. Consequently, the lack of strong natively integrated global corporate financial (delivered via an alliance with CODA) and time attendance/payroll modules (delivered via an alliance with Kaba Benzing), its erstwhile industry-lagging proprietary technology, and sluggish marketing prevented Cincom from closing many mega-enterprise deals during that period of market exuberance.

Technological Rejuvenation

To at least keep abreast of the competition, Cincom embarked a few years ago on technologically rejuvenating its product, while keeping its customer base abreast of the latest trends. More recently, the focus has also evolved to target collaborative e-Business and enhancements to the product centered around embedding workflow and messaging alerts (i.e., event management) to notify personnel based on defined business process parameters. To that end, the introduction of CONTROL, a Web-based ERP system, provided a foundation for complex manufacturers to use the Internet as to embrace e-Business and collaboration.

2001 especially marked Cincom's full-blown rollout of a new architecture. On one side, the entire system was Web enabled, with all applications incorporating an Internet Explorer (IE) interface, Active Server Pages (ASP), and other Microsoft technologies, including BizTalk for application integration and business process management (BPM), with the aim of pulling processes together to work in an integrated fashion including disparate applications, users and trading partners that can intervene either through personal digital assistant (PDA), mail, or a graphical representation such as portal, dashboard' or cockpit'.

Secondly, the company changed the way its applications are packaged and deployed, with a view to help its customers avoid the proverbial big bang' challenge of having to install or upgrade the entire system at once. To that end, in addition to the core functions of CONTROL that support ETO processes, the Enterprise Management suite offers six optional modules: Demand Management, Program Management (for project-oriented manufacturers), Quality Management, Financial Management, Aftermarket Management (including service and warranty management), and Collaboration Management.

As mentioned earlier, Financial Management functionality is delivered through a reseller agreement with CODA software, Quality Management comes from the reseller alliance with Pilgrim Software, whereas web-based Collaboration Management is developed in-house, leveraging Microsoft BizTalk, and it includes e-business document exchange, advanced electronic data interchange (EDI), Internet EDI, and a full e-collaboration infrastructure. An advanced planning & scheduling (APS), constraint-based system that is well attuned to the needs of complex manufacturers has also been delivered via an alliance with Ortems S.A. The Ortems' functionality is used both for planning and for real-time execution to balance the ever-changing availability status of equipment, personnel, and materials.

Cincom touts event-driven communications as a crucial capability for all manufacturers, whether they are seeking to speed up processes internally or externally. These are necessary features, as complex manufacturers are conducting a great deal of collaboration during the phases of design, configuration management, program management, and engineering change management (ECM). Therefore, they are in need of a system, which allows them to publish events internally and externally to other systems and other users, to support this broader, workgroup-based range of collaborative commerce functions. Addressing this need is Environ, an event-enabled control software, a publish-and-subscribe system that can send notices triggered by activities and events. These notices can be transformed into standard formats, including electronic data interchange (EDI), and transaction formats from the Open Applications Group (OAG). With CONTROL, Cincom has also built-in support for BizTalk, Microsoft's eXtensible Markup Language (XML) based integration software product, rendering the system from being a transaction-based environment to an event-enabled environment.

Cincom appears to have grasped the ongoing trend that business process improvements, made feasible through standards-based system integration and event- and exception-based business process automation, appear to be rising on the manufacturing enterprises' list of unresolved items. The reality that no system can satisfy all the needs and that business processes cross applications boundaries has lately even played in Cincom's and its veteran peers' favor. Namely, by providing a so-called "composite" applications overlay through the use of some of the technologies such as portals, e-mails/messaging, workflow, web application servers, data warehouses, business rules, business intelligence (BI), key performance indicators (KPI), event management, and middleware/enterprise application integration (EAI) enabling systems to link together information and business processes from existing systems, these vendors are now able to obfuscate the antiquity of their legacy-like underlying systems, as well as to make sense of once unwieldy hodgepodge of disparate applications.

Environ seemingly can help in that regard, and therefore, the above-mentioned surge in this new business of sprucing up old products in use, since it integrates with Microsoft's BizTalk Server technologies, running and managing automated business-processes across disparate applications, and handling workflow between employees, suppliers and customers. Having to deliver a number of functionalities through the above-mentioned third-party solutions, which would natively be offered by many larger competitors as a matter of course, may have deterred some interface-wary customers in the past. This might now be mitigated by seamlessly integrating these alien' applications in a manner that is transparent to customers, which has not been the case for earlier product releases where CONTROL and CODA were interfaced via off-line batch transfers and users had to access both systems separately.

This concludes Part One of a two-part note.

Part Two will continue the Market Impact, discuss Challenges, and make User Recommendations.

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